Israel: Cybersecurity Powerhouse

1. According to the June 15, 2017 Wall Street Journal, six Israeli startups (three in the cybersecurity sector) are among the top 25 tech companies, which may be the global leaders of tomorrow.

2. According to Forbes Magazine, Israel has become a cybersecurity powerhouse, creating more than 300 cybersecurity startups, exporting in 2016 $6.5BN in cybersecurity products, convincing more than 30 multinationals to establish local research & development centers in Israel and attracting foreign investors. According to Forbes, there are six reasons leading to Israel’s prominence in the world of cybersecurity: the close government-military-business-academia interaction; government support of early-stage cybersecurity startups; Israel’s military as a startup incubator and accelerator, combining research and operation; investing in human capital (e.g., cybersecurity is an elective high school matriculation exam, and operating six university cybersecurity research centers); Israel’s overall inter-disciplined and diverse human factor enhanced through military service and interaction with global giants; Israel’s constant need to defy security and commercial odds.

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3. Enhancing the mutually-beneficial, two-way-street US-Israel cooperation, a cybersecurity bilateral working group was established by the Trump Administration, aimed at combatting cyber offensives. Tom Bossert, White House homeland security and counterterrorism adviser, stated: “Israel’s agility in developing solutions will innovate cyber defenses that the US can test in Israel and bring back to America….”

4. During the first half of 2017 – in addition to Intel’s March 2017 acquisition of Israel’s Mobileye for $15.3BN – Israeli hightech companies were acquired by foreign companies for a total sum of $1.8BN. For example, Symantec, the Mountain View, CA software security and storage systems giant, acquired Israel’s FireGlass and Skycare (cybersecurity) for $250MN each (Globes, July 13, 2017).

5. During the second quarter of 2017, $1.3BN were invested in Israeli startups, mostly by foreign investors, second highest quarter in the last five years, compared to $1.1BN in the first quarter, as well as the fourth quarter of 2016, and $1.7BN in the second quarter of 2016. For instance, the Japanese giant SoftBank invested $100MN in Israel’s cybersecurity, Cybereason, and Johnson & Johnson led a $12MN round by Israel’s medical/nutritional tech, Day Two. Israel’s venture capital fund, Qumra, raised $115MN for its second fund, mostly from US and European Family Offices (Globes, July 20).

6. Intel is bolstering its operations in Israel – over and beyond its 10,000 employees, four R&D centers, two manufacturing plants and $4BN annual exports out of Israel – leveraging Israel’s cybersecurity added-value. Intel has recently expanded its Israel Cybersecurity Center of Excellence, partnering with Illusive Networks, a cybersecurity startup, and Israel’s Team8, a cybersecurity powerhouse, which has developed close contacts with Microsoft, Cisco, Qualcomm, ATT&T, Nokia, Mitsui and Eric Schmidt’s Innovation Endeavors, aiming to develop cutting edge cybersecurity technologies.

7. India-Israel trade balance surged from $200MN in 1992 to over $4BN in 2016.

According to the Executive Editor of Business India (published by the Begin-Sadat Center for Strategic Studies), “this sliver of a country [Israel] of 8.4 million is a leading innovation hub with the highest density of startups and venture capital in the world. It has more NASDAQ-listed companies than any other country save the US and China – more than India, France, Germany, Japan, South Korea, Singapore and Hong Kong combined. The total market capitalization of these Israeli companies exceeds $85BN…. Israeli companies either pioneered or were among the first to commercialize firewalls (CheckPoint), voicemail (Comverse), USB flash drives (M-Systems), VoIP (Vocaltec) and digital printing (Indigo).

“Israeli startups have also driven innovation across all major technology sectors, as in the cases of Amdocs and Comverse in telecommunications applications, Verint and NICE in contact center applications, Mercury in information technology (IT) management, Check Point in security, DSPG in semiconductors and Mellanox in Infiniband…. Israel has proportionately more scientists and tech professionals than any other country. Almost 40% of Israeli hightech employees are engaged in R&D for [over 200] major global tech companies that have subsidiaries or research centers in Israel. These include Intel, Microsoft, Google, Cisco, Facebook, Applied Materials, Apple, IBM, Hewlett-Packard (HP), Oracle and Motorola….

“Israel is a country 0.63% the size of India. Its population is 0.64% that of India and its GDP $297BN to India’s $2.25TN, but its GDP per capita is $34,000 to India’s $6,700…. With India its largest arms client, Israel netted its biggest-ever defense contract in April, 2017 when India awarded Israel Aerospace Industries (IAI) contracts totaling almost $2BN [medium-range surface-to-air missiles, air and missile defense systems and a long range SAM air and missile defense systems for India’s aircraft carrier]…. India buys from Israel military hardware worth an average of over $1BN annually… Israeli technologies can be used to boost the development of India’s critical sectors, including food security, water management and efficiency, cyberspace and data protection, e-learning and innovation and digitalization…. 21 memoranda-of-understanding were recently concluded between Indian and Israeli academic institutions….”

Ambassador (ret.) Yoram Ettinger is consultant to Israel’s Cabinet members and Israeli legislators, and lecturer in the U.S., Canada and Israel on Israel’s unique contributions to American interests, the foundations of U.S.-Israel relations, the Iranian threat, and Jewish-Arab issues.